Gold futures have fallen, tracking declines in the euro after a reading on the US labour market missed forecasts but didn't show enough weakness to lift expectations that the Federal Reserve will have to act to prop up the economy.
The most actively traded gold contract, for August delivery, on Friday fell $US30.50, or 1.9 per cent, to settle at $US1,578.90 a troy ounce on the Comex division of the New York Mercantile Exchange, the lowest ending price since June 28.
A recent set of weak US economic data has led to speculation that the Fed will take steps to support growth. That string continued on Friday as the Labor Department reported the US economy added fewer jobs than expected in June.
Gold initially cut its losses after the release of the data, reaching a high of $US1,601.60/oz, before resuming its retreat as the US dollar strengthened and investors viewed the report as not bleak enough to prompt imminent action from the Fed.
Some investors buy gold as a hedge against the inflation that can result from loose monetary policies from central banks. Moves in the gold price this year have largely tracked shifting expectations as to whether the US central bank would pump more money into the financial system.
But with inflation low in the US and much of Europe, the US dollar has been the primary beneficiary of investor nerves about the state of the global economy.
The US dollar hit a two-year high against the euro, making US dollar-denominated gold futures appear more expensive for buyers using the European common currency.
'Save-haven flows were squarely aimed at the greenback in the aftermath of the jobs figures,' said Jon Nadler, senior metals analyst with Kitco Metals.
BNP Paribas analyst Anne-Laure Tremblay said in a note that a sustained rebound in gold is dependent on more quantitative easing from the Federal Reserve, 'or an expansion of the Fed's balance sheet, which tends to have a larger impact on the US dollar and both inflation expectations and inflationary readings'.
One gold trader said that after the gold market's wild swings on Fed easing expectations earlier this year, investors were sceptical of reading too much into Friday's jobs report alone.
'I don't anticipate anything that is not well announced from the Fed,' the trader said.
'They have to do a lot of telegraphing to the market.'
Settlements: August delivery gold closed at $US1,578.90, down $US 30.50; September silver finished at $US26.920, down 75.2 US cents; October platinum ended at $US1,449.50, down $US28.20; September palladium settled at $US580.35, down $US5.40.